Why Xbox is poised to make the PlayStation a niche
product

This new console generation is going to be much different than the previous one. To win the console war, the console must win in the overall entertainment experience, rather than primarily just gaming.

We are seeing this as Microsoft’s Xbox One and Sony’s PS4 are designed to be multi-tasking machines with a wide variety of entertainment on top of their gaming capabilities.

Last Generation with the Xbox 360 and the PlayStation 3 (PS3), we have seen these systems sell about 80million units each over the course of 8 years. Microsoft’s Xbox 360 launched in late 2005 and Sony’s machine followed to market one full year later. When comparing this market to other markets like tablets which sold over 54 million units in the first quarter of 2014, 80 million units in 8 years seems relatively small, but of course gaming consoles aren’t as personal - they are shared with family so it might not be the best comparison, however it shows just how small this market is compared to other technology markets.

We have seen first-hand how getting the casual market right worked extremely well for the Nintendo’s Wii entertainment system last generation during its first few years in the market, before it fell apart in sales as the novelty wore off. However it still outsold Microsoft’s and Sony’s console by over 20million units, sitting comfortably at 100million unit sales.

The Importance of Non-gaming aspects for Market share

With Microsoft’s recent statistics around Xbox Live stating that over 50% of time on this service is spent consuming media, not playing games and that number is getting higher, content seems to be key this generation as we are connected in more ways than ever before with social networking, on demand content, and through various devices.

These machines will evolve over time, but currently there is a major difference in how these two consoles are designed to entertain the consumer. Xbox One is taking a much bigger step towards catering to the mainstream consumer than its rival, the PS4. It aims to be the centre of your living room entertainment experience, a major differentiating advantage for Microsoft seems to be Xbox One’s TV centric approach.

Xbox One’s HDMI input provides the ability to piggy back off of an existing cable box and have a specialized TV guide operated not only with a controller but Kinect’s voice commands. The Xbox One is heavily built around this peripheral which turns it into a completely unique experience using voice commands to do various things, such as telling it what to watch, launching and controlling apps, content browsing and offers a rich Skype experience. While Sony does offer a competitive device named “The PlayStation Eye,” it is not even in the same league in terms of capabilities - it is widely considered an afterthought and designed that way by Sony.

Microsoft recently announced that it will be producing its own big budget shows and content for its console. There are over 12 projects in the works and it seems as if Microsoft is taking this very seriously with ambitious original programming projects. Sony on the other hand seems to be concentrating primarily on the gamer and offer no signs of doing such things.

Although looking at current sales figures of these two consoles tells a more positive story for Sony at the moment, as its sitting in a comfortable lead with over 7 million consoles sold compared to the Xbox One’s 5 million, this a long battle and as these machines evolve over time with different SKU’s, price points and features, things can change drastically.

There are two major advantages Microsoft holds over its rival which can change this console war significantly in Microsoft’s favor, and in this generation of entertainment consoles they are more critical than ever.---XBO/PS4 HauntedBlueMoon - The Red Turtle Shell. Terrorizing Gamers Since 1992

#2nb003_99Posted 5/4/2014 5:04:53 PM

"We are seeing this as..."Who else do you speak for?---"DRM aside, all of Microsofts moves have been as intended." - Hentaidoji

#3LEGEND_KILLERRR(Topic Creator)Posted 5/4/2014 5:05:06 PM

The first advantage is the ecosystem Xbox One is tied to - it’s heavily reliant on the Microsoft Cloud and its many services, which integrate heavily with Windows 8 and Windows Phone, not only that but most of these services are also available on iOS and Android making it a more connected software experience.

Microsoft did a smart thing by making Windows 8 Xbox One’s core operating system, this allows for universal app development across Microsoft’s platforms with the app API’s being very similar. Microsoft being a software company has this advantage over Sony, therefore we expect to see a much better offering of content on the Xbox One and integration with Windows and Microsoft services on other platforms. Sony is primarily a hardware company who doesn’t design and build its own OS, they will not will be able to duplicate this.

Sony’s deteriorating financial status

The second key advantage is Microsoft’s financial status - Sony has been financially weakened and hasn’t been able to turn a profit in many years. Sony’s CEO Kaz Hurai just recently slashed the company’s profit forecast for the business year-end in March from a previous estimate last May. They recently sold off their PC division and spun off their TV division, which in the last 10 years has lost a total of $7.8billion.

There is increasing pressure from shareholders for Sony to sell, or spin off even more of the company’s assets. Sony’s PS4 is selling very successfully in the market, but development costs suggest it could take at least another year to turn a profit, with Sony’s troubling financial position it will remain difficult to innovate and invest in a broader set of entertainment services on the PS4, while Microsoft on the other hand doesn’t have these issues.

There are rumors of Microsoft being in talks with Internet service providers and cable companies to sell the Xbox subsidized to their consumers. There are also rumors of a non-gaming Xbox made to compete with Apple TV, Roku and Amazon’s Fire TV, these can be game changers for the Xbox brand and Microsoft. The cloud promise of the Xbox One is a very interesting concept, although it hasn’t really showed off of its capabilities yet, but the sheer scale of Microsoft’s Azure platform and what its powering today in enterprise, as well what Microsoft showed off at Build with cloud processing makes for one convincing possibility that it can provide the Xbox One significant cloud based rendering.The console is like the Movie theatre experience while mobile gaming is like the YouTube experience – YouTube user numbers dwarf the number of movie theatre goers, but the quality of content is far better in the movie theatre - its where the consumer will spend money.

With consoles being sold at near break-even prices and game development costs becoming significantly higher this generation, along with a shrinking gaming market, there isn’t as much money to be made in just being primarily a gaming console. Exclusive content, interactivity with other devices around your home and apps will be this generation’s catalyst, and the company that seems to have the right formula to win is Microsoft.

This is when the real battle for market share dominance begins, as acceptance of the mainstream market could take sales much higher than the 10 million units sold annually last generation. Having a console as a centralized hub for all your devices and integrating with core software services is essential in creating the ultimate living room entertainment system. Looking at what both companies can offer, points to a decisive win for Microsoft as this generation evolves with Sony becoming a niche device for the hard-core gamer and ultimately fading away as things move more towards the cloud---XBO/PS4 HauntedBlueMoon - The Red Turtle Shell. Terrorizing Gamers Since 1992

#4nb003_99Posted 5/4/2014 5:06:44 PM

"We have seen..."---"DRM aside, all of Microsofts moves have been as intended." - Hentaidoji

#5axelfooley2k5Posted 5/4/2014 5:07:57 PM

topic title and first 2 sentences were enough.

People want a gaming machine focused on games for gamersnot tv functions and entertainment functions.---Sergeant Harrison Yateshttps://www.youtube.com/watch?v=mv62bDzeWKQ

Sales show a different picture---Law of the universe states the strong shall survive and the weak fall by the way, I don't give a damn what idealistic plan is cooked up, nothing changes that

#10Apex-PlayerPosted 5/4/2014 5:12:20 PM

xbox exclusives - meet PCMS TV shows - meet showtime

Think things are going so so now? Wait until all the content they offer is available anywhere else. It won't exactly help the xboxone take off. It will generate more profits for MS, well rendering the xboxone completely unnecessary.---PSN/ Comfort_Cat